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Renting is frequently more worthwhile than buying for financially-constrained households

Dr Isaac Tabner

On average homeowners need to own their own home for up to a decade before returns from the rent they are no longer paying begin to compensate for the buying costs.

Dr Tabner said: "It is often thought that buying a house makes more financial sense in the long run: however, renting is frequently more worthwhile than buying for financially-constrained households, as well as households likely to relocate within 10 years.

"As well as a reduced ability to recover transaction costs, households relocating within a few years face a higher risk that medium-term prices will move against them, thus reducing or eliminating their equity, while financially-constrained households face much higher mortgage costs."

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Buyers often overlook added costs like building insurance and the up keep of the property

In the study Dr Tabner and his team provided a step-by-step explanation of how households compare costs of renting against buying a home.

Outside of Britain, Japan and more recently Eurozone countries like France have experienced prolonged periods of deflation.

Despite efforts to keep inflation positive, realised inflation has been consistently below the Bank of England's median inflation forecasts since the second quarter of 2013.

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It can take up to a decade before homeowners make returns

Taking into account their own personal circumstances and macro-economic conditions homeowners reviewed transaction costs, renal yields, inflation and the length of time owning a home.

Dr Tabner found that during periods of deflation or zero inflation people who rent are financially better off than those who own their own home.

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But increases in inflation and imputed rent tip the balance in favour of ownership.

Anyone purchasing a home without a mortgage at deflation of just 1 per cent a year can result in the loss of half the present purchase value of their home if they hold it for 45 years.

In contrast inflation - including wages of 2 per cent per year - results in the same individual gaining 50 per cent of the present purchase value of their home if held for 28 years.

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Renting is better for those who do not want to put down roots for at least ten years

Dr Tabner added: "Individual circumstances and market conditions play a big part in determining whether it is smarter to rent or buy, but this research should help households, financial planners and policy-makers make an informed choice."